Risk & Business

Oakland Ca, is now requiring pot farms to carry 2.0 million of liability limits. This is to comply with the city ordinance to run the "farms". This shows how far insurance has come. Without the insurance industry the world would not work. I can only imagine that the insurance agents and brokers that write the policies & will have to do field inspections to see what they are covering. Returns to the office will be optional.  Until next time know your risks and be careful out there. K

One of the biggest scams going against small buisness owners occurs from their accounting people. Employees that have access to writing checks or depositing checks for a business owners can write checks to fake vendor accounts or sign over checks to themselves. Recently in New York, a bookeeper embezzled 25K by signing over checks to herself. Most of the time the theft is done over many years and is in small amounts. By staying under the radar, they get away with it. Business owners usually are so busy running the business they miss it. Take some time Mr. business owner to check your bank statements and also the incoming checks and payments out. Make sure that their are two signers for every check. Stay in touch with your bankers so they can keep an eye out for red flags. Until next time be careful out there and know your risks.  K

I have recently had more requests for financial information about my company. This trend is disturbing and I believe it is a result of the recession. My advice to business owners is try to get out of it. If you have a vendor or supplier that wants financials and has done business with you in the past, tell them to forget it. If your past history has been good then why should they need financials. The vast majority of small business is privately held. Therefore there is no reason to show the public your financial information. In the information age protection of privacy is paramount. There are many out there that want to gain leverage by exposing your financials. Hold the course, resist. Until next time be careful out there and know your risks. K

Traditional roofing systems are designed to shed water off the roof. Building engineers designed buildings and roof loads with this in mind. Now comes green roofing systems. These vegetative roofs are designed to hold water on the roof. Now engineers have cautioned that buildings may not be able to hold the weight especially if the roofs are retrofitted on older buildings. The other issue is that with a vegetative roof, the amount of water that eventually is used by the plants and joins the water cycle of the atmosphere is hard to predict. So water loading may lasts for weeks after heavy rains. As these systems come into place engineers will learn more on how they will work. Unfortunately more claims may be the teacher. Until next time be careful out there and know your risks. K

When Elliott Spitzer brought down the big brokers in a bid rigging scandal, contingent commissions (back end payments from carriers) were pretty much dead. Most of the big brokers declared they would not accept these payments in order to not be influenced on where to place insurance for clients. Well pretty much all the big players except Willis, are now back accepting contingencies. In the small to middle size agencies and brokers, this practice never went away. You may ask why the turnaround. Well quite frankly it is because companies have lowered commissions over the last 10 years that contingency commissions are the only way they can make profit. In a recent study by 98% of all agents and brokers depend on contingencies to make money. So now the big boys tried to go without it but the hard reality brought them back to accepting these back end payments. There is no question that this will continue. Does it affect the quality of service to clients? The answer is no. Agents and Broker

I read an article in the insurance journal the other day about Louisiana's economy. The "perfect storm" of sour economic conditions is brewing. BP oil spill, space program shut down, defense contractor cut backs, and the recession, are all showing continual economic erosion in the State for the forseeable future. This makes me realize that no matter how good you are as a risk manager of your business, there are still risky things out of your control that can devastate your business. The good news is that these scenarios happen very rarely and due to the low frequency, small business still survives and grows. Until next time be careful out there and know your risks. K

One of my clients the other day asked me the difference between an agent and a broker. With that question I realized that insurance terms can be confusing so I thought I would touch on a few in this blog: Agent- represents the insurance company and brings their products to clients Broker- represents the client and finds insurance company products for them Insurer- the insurance company Insured- you the client and policy holder Carrier- another name for the insurance company Surplus Lines- where you go for hard to place coverage These are just a few terms that hopefully I have cleared up for you. Back to agent & broker, at my firm CNC Insurance, we are both. That way we can provide the best insurance service for our clients. Until next time be careful out there and know your risks. K

Finally the Feds, passed a 5 year extension of the flood program. This is a big relief to consumers and agents. Now let's hope there is money to fund it. Be careful out there.  K

I read the simplest description of enterprise risk management that I wanted to share. Enterprise Risk Management is about capital, Physical, Financial, and Human. By looking at the capital of small business in this way,  it is easy to understand. Take out or minimize the risk in your physical plant or property, and with your balance sheet, and finally with your employees. With this type of thought process small business owners can simplify the risk managment process. Good Luck !  Until next time be careful out there and know your risks. K

Small business owners lack in one aspect of employee management, that is documentation. In many cases of HR lawsuits, lack of documentation has been problematic for employers. The main reason is that employers are so busy running their business they simply forget to document disciplinary issues or do not take the time. This comes back to bite them when there is legal challenges from employees. Good risk management will tell you to document, document, document. It may take some effort but it will be well worth it in the long run. Until next time be careful out there and know your risks. K

The Feds are now asking health insurance companies to cover more people before the 2014 health exchanges go into effect. This is an effort to try to mitigate the erosion of the private health market that is expected as the Federal health insurance initiatives begin. The health insurers are seeing the bleak future and are starting to work toward lessening underwriting restrictions to get more people into private plans. Also the Obama administration is trying to put in place tax incentives for small business owners to keep their plans. As you can see there is a lot if unknown into all this and only time will tell. My thought is that the private insurance market is going to have a hard time competing with the Feds on any level. They might be able to get more people in the health system now, but in 2014 when the exchanges begin, the option of less expensive health care is going to eventually erode the private market. Until next time be careful out there and know your risks. K

The US Chamber just did a study and found that small businesses in the United States bear 81% of the tort liability costs mostly out of pocket. This is draining small business owners and holding back job creation. The legal climate in the US is adversely affecting small business. There are many reasons for this, but in any case the risk factors are increasing to operate a small business. It is not a matter of if you get sued but when. It is very improtant that risk management play an ever increasing role in the business owners operations. Since the majority of the legal costs come out of pocket, risk soultions and insurance solutions to protect small businesses are critical. Do not put risk management on the back burner. Until next time be careful out there and know your risks. K

A National insurance broker Marsh, informed their clients to make their liability claims regarding the BP oil spill now. They are warning them because of an often forgotten condition of liability policies, timely reporting. Small business owners should also be aware of this condition. If you have a potential liability claim against your company , report it to your agent or broker immediately. If you do not, you may be surprised when the insurance carrier denies the claim because of not reporting it in a timely fashion. There is a lot of gray area on this so report your potential claims even if you are not sure, that way you are safe. Until next time be careful out there and know your risks.  K

Drug testing is a common practice in business today. Most of it is done post accident as part of the company's employment policy. However employers are getting more than they bargain for. Along with illegal drugs, many employees are showing positive results for many prescription drugs that could be affecting performance. How to handle these situations is real dicey. Disciplinary action or termination of the employee could find the employer in violation of State and or Federal laws. Make sure you check with an HR professional or your attorney when dealing with positive drug tests. In these situations knee jerk reactions may not be the best protocol.  Until next time be careful out there and know your risks. K

Starting July 1 people who do not have health insurance and have a pre-existing condition can apply for health insurance. This program paid for by the Federal Gov't is available in all States. I went on the website and looked at how to apply and I saw no links or contacts for licensed agents. This bothers me since I spend thousands of dollars each year to keep my agents licensed and educated. However the Federal Government program shows no evidence of licensed insurance professionals guiding the placement of this insurance. I am concerned that consumers will not have the advantage of having a license professional to help explain all the options. Agents and brokers are needed to help place insurance. They should be included the Federal Health program placement. Until next time be careful out there and know your risks.  K

Post Katrina, the need for quick drywall to fix homes created a demand for drywall from China. Unfortunately this drywall had a compound in it called strontium sulfide which has made people ill. The lawsuits were filed and judgements against contractors and suppliers are mounting. Recently a Florida couple was awarded 2.2 million. There is no remedy for the drywall other than to replace it. The insurance industry has been pretty much unhurt by this so far but are starting to feel the pain of the claims. Though this has been around awhile the story is still developing. I will keep you posted. Until next time be careful out there and know your risks.  K

Image via Wikipedia The U.S. Senate approved a temporary reauthorization of the of the federal flood insurance program until September 30 th of this year. The reauthorization is retroactive until June 1st, the date the program was cut off. After President Obama signs the measure all those that have been going without need to quickly move forward with their applications. This has been one of many political footballs being kicked around this year and it shouldn't be taken for granted that the program will indeed stay in force until it's stated expiration date of September 30. Remember, it's hurricane season and those living within reach of the coast need to make sure they have taken advantage of this valuable program while they still can.